Lower treasury income dents Allahabad Bank profit

Lower treasury income dents Allahabad Bank profit

Kolkata: State-run lender Allahabad Bank on Friday said Oct-Dec net profit fell 6.5% and a top official attributed the drop to lower treasury income during the quarter.

The Kolkata-based lender reported net profit of Rs3.45 billion, compared with 3.69 billion a year-ago. A Reuters poll of brokerages had estimated net profit of Rs1.88 billion.

Treasury income more than halved to Rs1.33 billion from 2.88 billion a year ago, J.P. Dua, chairman and managing director told reporters. “That’s the main reason for the drop in net profit," he added.

“Our net profit for Oct-Dec quarter from the core operations stood at Rs2.12 billion as against Rs810 million a year ago," he said..

In the same period, net interest income of the bank stood at Rs6.76 billion, up 11% compared to Rs6.04 billion last year.

The bank’s net interest margin (NIM) narrowed to 2.97% during the quarter from 3.24% a year ago.

“The lending rates have come down significantly from the corresponding period last year, which explains why the NIM was down marginally," Dua said.

The bank expects to maintain a NIM of 2.75% going forward in the Jan-Mar quarter, he added.

“Our bulk deposits as on December 2009, stood at Rs11.06 billion compared to Rs88.31 billion, a year ago. Currently, the incremental cost of borrowing is at around 5.57%, so we will be able to maintain a NIM of at least 2.75% going forward."

The net non-performing assets to net advances ratio came down to 0.35% as against 0.82% a year ago, he said.

The bank reported a year-on-year advances growth of 24.51% while deposits grew 25.39%.

“We are witnessing increasing credit off-take from the sectors like retail and infrastructure. Going by the current trends, in the current quarter we would comfortably achieve our target of 18% credit growth for the fiscal 2009-10," Dua said.